Vishay Precision Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - September 3, 2015

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Exhibit 99.1
For Immediate Release
VPG Reports Fiscal 2015 Second Quarter and Six Month Results
Second quarter net revenues of $59.5 million, within guidance. Company files Form 10-Q for the second quarter and first six months of fiscal 2015.

MALVERN, Pa. (September 3, 2015) -- Vishay Precision Group, Inc. (NYSE: VPG), a leading producer of precision sensors and systems, today announced its results for its second quarter fiscal 2015 and six months ended June 27, 2015.
Ziv Shoshani, VPG’s chief executive officer said, “We have completed our review and analysis of certain adjustments to our historical financial statements for a subsidiary located in India as a result of certain transactions that were recorded for this subsidiary in the local currency, the Indian rupee, instead of the functional currency, the U.S. dollar, in prior periods extending back to 2011. The impact of these prior period adjustments was not material to any of these prior periods. As a result, we have made adjustments to our financial statements to correct these and other immaterial errors. The adjusted financial statements may be found in Note 12 of our Form 10-Q, which we filed with the Securities and Exchange Commission today.”
In commenting on second quarter fiscal 2015 financial results, Mr. Shoshani added, “From a performance perspective, our revenues continued to be significantly impacted by the negative effect of foreign currency exchange rates of $5.1 million, compared to the second quarter of 2014. At the same time, our new advanced sensor product and on-board weighing systems continue to gain traction in the marketplace. We remain focused on our strategy of enhancing shareholder value.”
Net revenues for the second quarter of 2015 were $59.5 million, representing an 8.7% decrease from $65.2 million of net revenues for the comparable prior year period. Net revenues for the six months ended June 27, 2015 were $116.1 million, representing an 8.1% decrease from the $126.4 million of net revenues for comparable prior year period. Comparing sequential results, net revenues for the second quarter of 2015 increased by $2.9 million, or 5.1%, from $56.6 million in the first quarter of 2015.
Net earnings attributable to VPG stockholders for the second quarter of 2015 were $1.5 million, or $0.11 per diluted share, compared to net earnings attributable to VPG stockholders for the second quarter of 2014 of $3.6 million, or $0.26 per diluted share. Foreign currency exchange rates for the second quarter of 2015 as compared to the prior year period had a negative impact on net income of $0.4 million, or $0.03 per diluted share. Net earnings attributable to VPG stockholders for the six months ended June 27, 2015 were $2.3 million, or $0.17 per diluted share, compared to net earnings attributable to VPG stockholders of $4.8 million, or $0.34 per diluted share for the comparable prior year period. Foreign currency exchange rates for the six months of 2015 as compared to the prior year period had a negative impact on net income of $0.8 million, or $0.06 per diluted share.
Adjusted net earnings attributable to VPG stockholders for the second quarter of 2015 were $1.8 million, or $0.13 per diluted share, versus adjusted net earnings attributable to VPG stockholders of $3.6 million, or $0.26 per diluted share for the comparable prior year period. Net earnings attributable to VPG stockholders for the second quarter of 2015 include $0.03 million of KELK acquisition purchase accounting adjustments (which impacted costs of products sold), $0.3 million of restructuring costs, and $0.04 million of associated tax effects.

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Adjusted net earnings attributable to VPG stockholders for the six months ended June 27, 2015 were $2.7 million, or $0.19 per diluted share, versus adjusted net earnings attributable to VPG stockholders of $5.0 million, or $0.36 per diluted share for the comparable prior year period. Net earnings attributable to VPG stockholders for the six months ended June 27, 2015 include $0.03 million of KELK acquisition purchase accounting adjustments (which impacted cost of products sold), $0.4 million of restructuring costs, and $0.06 million of associated tax effects, versus $0.4 million of KELK acquisition purchase accounting adjustments and restructuring costs, and $0.1 million of associated tax effects for the comparable prior year period.
Segments
The Foil Technology Products segment revenues were $26.2 million in the second quarter of 2015, down 6.7% from $28.0 million in the second quarter last year, and up 4.4% from $25.1 million in the first quarter of 2015. Net revenues were negatively impacted by the effects of foreign currency exchange rates by $1.7 million in the second quarter of 2015 as compared to the second quarter of 2014, and were negatively impacted by $0.2 million as compared to the first quarter of 2015. The gross profit margin for the segment decreased to 39.6% for the second quarter of 2015 compared to 40.5% in the second quarter last year, and down from 41.4% in the first quarter of 2015. The gross profit margin decreased from the comparable prior year period primarily due to the effects of foreign currency exchange rates and additional headcount for expansion of our advanced sensor platform. Despite an increase in revenues, the sequential gross profit margin decrease was due primarily to the effects of foreign currency exchange rates and other costs.
The Force Sensors segment revenues of $15.6 million in the second quarter of 2015 were down 7.9% compared to $17.0 million in the second quarter last year, and were up 2.7% from $15.2 million in the first quarter of 2015. Decreased year-over-year revenues are attributable primarily to the effect of foreign currency exchange rates of $0.9 million. The increase in sequential revenues is attributable to higher volume. The gross profit margin for the segment was 19.0% in the second quarter of 2015 versus 22.7% in the second quarter of 2014 and 21.8% in the first quarter of 2015. The gross profit margin for the quarter decreased from the comparable prior year period primarily due to the effects of foreign currency exchange rates. The sequential gross profit margin decreased due to a reduction in inventory.
The Weighing and Control Systems segment revenues were $17.7 million in the second quarter of 2015, down 12.1% from $20.2 million in the second quarter last year, and up 8.6% from $16.3 million in the first quarter of 2015. Net revenues were negatively impacted by the effects of foreign currency exchange rates of $2.4 million in the second quarter of 2015 as compared to the second quarter of 2014. The sequential increase is attributable to volume in our process weighing business. The gross profit margin for the segment was 43.6% in the second quarter of 2015 versus 48.2% in the second quarter of 2014 and 44.6% in the first quarter of 2015. The year-over-year decrease in gross profit margin is primarily due to the effects of foreign currency exchange rates and unfavorable product mix. The sequential decrease in gross profit margin is primarily due to higher freight costs and unfavorable product mix.
Outlook
Mr. Shoshani concluded, “Assuming a similar exchange rate impact to our revenues and given the normal seasonality in our business, we expect net revenues in the range of $55 million to $60 million for the third quarter of 2015.”
*Editor’s Note: We define adjusted net earnings as net earnings attributable to VPG stockholders before acquisition purchase accounting adjustments, restructuring costs, and

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associated tax effects. ** For a reconciliation of GAAP to non-GAAP financial information, refer to the quarterly financial tables.
About VPG
Vishay Precision Group, Inc. (VPG) is an internationally recognized designer, manufacturer and marketer of: components based on its resistive foil technology; sensors; and sensor-based systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. VPG is a market leader of foil technology products, providing ongoing technology innovations in precision foil resistors and foil strain gages, which are the foundation of the company's force sensors products and its weighing and control systems. The product portfolio consists of a variety of well-established brand names recognized for precision and quality in the marketplace. To learn more, visit VPG at www.vpgsensors.com.
Forward-Looking Statements
From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, changes in the current pace of economic recovery, including if such recovery stalls or does not continue as expected; difficulties or delays in completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; difficulties in implementing our ERP system and the associated impact on manufacturing efficiencies and customer satisfaction; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to lower-labor-cost countries; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
VPG
Wendy Wilson
Senior Director Investor Relations and Corporate Communications
919-374-5501
wendy.wilson@vpgsensors.com
###


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VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
June 27, 2015
 
June 28, 2014
Net revenues
$
59,508

 
$
65,162

Costs of products sold
38,473

 
40,253

Gross profit
21,035

 
24,909

Gross profit margin
35.3
%
 
38.2
%
 
 
 
 
Selling, general, and administrative expenses
18,396

 
19,897

Restructuring costs
304

 
7

Operating income
2,335

 
5,005

Operating margin
3.9
%
 
7.7
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(173
)
 
(240
)
Other
(414
)
 
(247
)
Other income (expense) - net
(587
)
 
(487
)
 
 
 
 
Income before taxes
1,748

 
4,518

 
 
 
 
Income tax expense
288

 
948

 
 
 
 
Net earnings
1,460

 
3,570

Less: net loss attributable to noncontrolling interests
(16
)
 
(8
)
Net earnings attributable to VPG stockholders
$
1,476

 
$
3,578

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
0.11

 
$
0.26

Diluted earnings per share attributable to VPG stockholders
$
0.11

 
$
0.26

 
 
 
 
Weighted average shares outstanding - basic
13,580

 
13,756

Weighted average shares outstanding - diluted
13,790

 
13,968



4


VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Operations
 
 
 
(Unaudited - In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Six fiscal months ended
 
June 27, 2015
 
June 28, 2014
Net revenues
$
116,116

 
$
126,402

Costs of products sold
74,102

 
79,783

Gross profit
42,014

 
46,619

Gross profit margin
36.2
%
 
36.9
%
 
 
 
 
Selling, general, and administrative expenses
37,144

 
39,060

Restructuring costs
382

 
331

Operating income
4,488

 
7,228

Operating margin
3.9
%
 
5.7
%
 
 
 
 
Other income (expense):
 
 
 
Interest expense
(360
)
 
(456
)
Other
(1,343
)
 
(683
)
Other income (expense) - net
(1,703
)
 
(1,139
)
 
 
 
 
Income before taxes
2,785

 
6,089

 
 
 
 
Income tax expense
478

 
1,277

 
 
 
 
Net earnings
2,307

 
4,812

Less: net (loss) earnings attributable to noncontrolling interests
(29
)
 
59

Net earnings attributable to VPG stockholders
$
2,336

 
$
4,753

 
 
 
 
Basic earnings per share attributable to VPG stockholders
$
0.17

 
$
0.35

Diluted earnings per share attributable to VPG stockholders
$
0.17

 
$
0.34

 
 
 
 
Weighted average shares outstanding - basic
13,663

 
13,754

Weighted average shares outstanding - diluted
13,875

 
13,963




5


VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
June 27, 2015
 
December 31, 2014
 
(Unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
65,456

 
$
79,642

Accounts receivable, net
38,250

 
37,427

Inventories:
 
 
 
Raw materials
13,808

 
14,223

Work in process
21,245

 
19,813

Finished goods
20,716

 
18,806

Inventories, net
55,769

 
52,842

 
 
 
 
Deferred income taxes
5,552

 
5,636

Prepaid expenses and other current assets
9,394

 
10,361

Total current assets
174,421

 
185,908

 
 
 
 
Property and equipment, at cost:
 
 
 
Land
1,891

 
1,893

Buildings and improvements
50,555

 
49,909

Machinery and equipment
79,948

 
78,500

Software
6,997

 
6,837

Construction in progress
2,678

 
2,928

Accumulated depreciation
(91,820
)
 
(89,374
)
Property and equipment, net
50,249

 
50,693

 
 
 
 
Goodwill
12,046

 
12,788

 
 
 
 
Intangible assets, net
15,416

 
17,381

 
 
 
 
Other assets
20,352

 
20,393

Total assets
$
272,484

 
$
287,163



6


VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Balance Sheets
 
 
 
(In thousands)
 
 
 
 
June 27, 2015
 
December 31, 2014
 
(Unaudited)
 
 
Liabilities and equity
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
8,780

 
$
10,559

Payroll and related expenses
14,046

 
14,216

Other accrued expenses
14,776

 
16,902

Income taxes
127

 
2,133

Current portion of long-term debt
16,366

 
5,120

Total current liabilities
54,095

 
48,930

 
 
 
 
Long-term debt, less current portion
4,635

 
17,713

Deferred income taxes
610

 
638

Other liabilities
7,431

 
7,644

Accrued pension and other postretirement costs
12,014

 
12,353

Total liabilities
78,785

 
87,278

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity:
 
 
 
Common stock
1,276

 
1,273

Class B convertible common stock
103

 
103

Treasury stock
(6,169
)
 
(32
)
Capital in excess of par value
189,769

 
189,532

Retained earnings
37,671

 
35,335

Accumulated other comprehensive loss
(29,111
)
 
(26,560
)
Total Vishay Precision Group, Inc. stockholders' equity
193,539

 
199,651

Noncontrolling interests
160

 
234

Total equity
193,699

 
199,885

Total liabilities and equity
$
272,484

 
$
287,163






7


VISHAY PRECISION GROUP, INC.
 
 
 
Consolidated Condensed Statements of Cash Flows
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
Six fiscal months ended
 
June 27, 2015
 
June 28, 2014
Operating activities
 
 
 
Net earnings
$
2,307

 
$
4,812

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
 
 
 
Depreciation and amortization
5,524

 
5,783

(Gain) loss on disposal of property and equipment
(1
)
 
9

Share-based compensation expense
416

 
485

Inventory write-offs for obsolescence
916

 
562

Other
1,121

 
(54
)
Net changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(1,671
)
 
(4,857
)
Inventories, net
(4,345
)
 
346

Prepaid expenses and other current assets
943

 
(586
)
Trade accounts payable
(1,670
)
 
(281
)
Other current liabilities
(3,589
)
 
(1,338
)
Net cash (used in) provided by operating activities
(49
)
 
4,881

 
 
 
 
Investing activities
 
 
 
Capital expenditures
(5,037
)
 
(3,435
)
Proceeds from sale of property and equipment
65

 
63

Net cash used in investing activities
(4,972
)
 
(3,372
)
 
 
 
 
Financing activities
 
 
 
Principal payments on long-term debt and capital leases
(1,810
)
 
(2,070
)
Purchase of treasury stock
(6,137
)
 
—

Distributions to noncontrolling interests
(45
)
 
(43
)
Net cash used in financing activities
(7,992
)
 
(2,113
)
Effect of exchange rate changes on cash and cash equivalents
(1,173
)
 
250

Decrease in cash and cash equivalents
(14,186
)
 
(354
)
 
 
 
 
Cash and cash equivalents at beginning of period
79,642

 
72,809

Cash and cash equivalents at end of period
$
65,456

 
$
72,455





8


VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Consolidated Adjusted Gross Profit Margin
 
 
 
 
 
 
(Unaudited - In thousands)
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
Six fiscal months ended
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
Gross profit
$
21,035

 
$
24,909

 
$
42,014

 
$
46,619

Gross profit margin
35.3
%
 
38.2
%
 
36.2
%
 
36.9
%
 
 
 
 
 
 
 
 
Reconciling items affecting gross profit margin
 
 
 
 
 
 
 
Acquisition purchase accounting adjustments
26

 
2

 
26

 
41

 
 
 
 
 
 
 
 
Adjusted gross profit
$
21,061

 
$
24,911

 
$
42,040

 
$
46,660

 Adjusted gross profit margin
35.4
%
 
38.2
%
 
36.2
%
 
36.9
%




VISHAY PRECISION GROUP, INC.
 
 
 
 
 
 
 
Reconciliation of Adjusted Earnings Per Share
 
 
 
 
 
 
 
(Unaudited - In thousands, except per share data)
 
 
 
 
 
 
 
 
Fiscal quarter ended
 
Six fiscal months ended
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
Net earnings attributable to VPG stockholders
$
1,476

 
$
3,578

 
$
2,336

 
$
4,753

 
 
 
 
 
 
 
 
Reconciling items affecting operating margin
 
 
 
 
 
 
 
Acquisition purchase accounting adjustments
26

 
2

 
26

 
41

Restructuring costs
304

 
7

 
382

 
331

 
 
 
 
 
 
 
 
Reconciling items affecting income tax expense
 
 
 
 
 
 
 
Tax effect of adjustments for purchase accounting and restructuring costs
41

 
2

 
57

 
94

Adjusted net earnings attributable to VPG stockholders
$
1,765

 
$
3,585

 
$
2,687

 
$
5,031

 
 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
13,790

 
13,968

 
13,875

 
13,963

 
 
 
 
 
 
 
 
Adjusted net earnings per diluted share
$
0.13

 
$
0.26

 
$
0.19

 
$
0.36





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Vishay Precision Group, Inc. Reports